Non-Disclosure Agreement (NDA)

A non-disclosure agreement (NDA), also called confidentiality agreement or confidential disclosure agreement, is a legal contract between two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain evaluation purposes, but wish to restrict from wider use or dissemination. It is a contract through which the parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects non-public business information, and if the information is leaked, the injured party can claim breach of contract.

NDAs are commonly used when two companies, individuals, or other entities (such as partnerships, cooperatives, etc.) are considering a relationship or collaboration and need to understand the other's processes, methods, or technology solely for the purpose of evaluating the potential of a business relationship. In this context, an NDA allows the parties to have open and honest communications allowing a better evaluation of such potential.

How to use this document

In a new business relationship, NDAs can be either:

• mutual: both parties are restricted in their use of the information provided; or
• unilateral: only one party will be restricted in their use of the information provided during the business relationship.

This document will identify the details of each party, the length of time during which the agreement will run, and the specific purpose for which the confidential information will be disclosed. This non-disclosure agreement will ensure that confidential business information is not divulged.

The parties will both need to sign the document. Once the document is signed, each party should keep a copy of the NDA for their records.

Applicable laws

In Canada, the majority of laws governing confidential information is derived from common law rather than statutes (except Quebec). In practical terms, this means there is minimal if any legislation on the subject, and non-disclosure agreements will be interpreted according to the body of common law applicable in the province or territory designated in the agreement.

How to modify the template

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